Session Long Project 3: ”Kraft Foods Group”

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Table of Contents

Introduction
Tangible Resources
Intangible Resources
Cultural, reputational and strategic alliances
Distinctive capabilities
Conclusion
References

Introduction

Resources are important since they help a company in its production process. Resources are the source of input and major determinants of output (Henry, 2007). A company that has more resources may have an advantage over its competitors. However, it is important to note that resources have to be utilized effectively for them to give the company an advantage.

On their own, resources do not have any benefit to the organization. Resources, therefore, need to be transformed to benefits. As resources are transformed to benefits, they usually become overstretched or they get used up. Resources are categorized into two classes: tangible resources and intangible resources. This essay evaluates the resources of Kraft Foods Group and how they help the company gain a competitive advantage.

Tangible Resources

These are resources that can be touched, seen and can be felt. There are different categories of tangible resources. At Kraft Foods Group, the following are the available the tangible resources.

Physical resources

These are resources that have been made by human beings and they help in execution of daily activities. In an organization, physical resources include fixed capital assets such as buildings, equipment, machinery, land, as well as any other item that helps the business in its activities and can be considered as a fixed asset (Henry, 2007).

Kraft Foods Group is rich in capital assets and it utilizes them to gain an advantage over its competitors. The company’s plants and equipment are recorded in their historical costs, and their depreciation is calculated using the straight line method. The period over which equipment is depreciated is highly dependent on its use and the type of equipment.

For instance, in the case of machinery depreciation period ranges between 3 years to 20 years after which its economical life is over and can be disposed. Apart from the plant and machinery, the company also has sufficient land that is used for productive purposes.

Financial resources

These are resources that refer to money flow within the organization. Kraft Group is a company that is strong in terms of finance (Henry, 2007). Financial resources are very important to any company since they enable the day-to-day running of the organization’s operations.

At Kraft Foods Group, financial reports are prepared in accordance with the GAAP principles. They are reported in income statement, cash flow statement, statement of comprehensive income, as well as the statement of financial position, liabilities and shareholders’ equity. Over the last couple of years, the company has recorded financial increase. This indicates profitability in the company.

Human resource

This is the most valuable resource in any organization. Kraft Foods Group recognizes that human resources are vital for the development of the organization. As a result, the company highly values its human resources. They are the ones who shape the company’s decisions and helps its employees develop in terms of skills and expertise. The company has sufficient human resources.

Intangible Resources

Technical resources

Technical resources of a company depend on the human resources that are available, as well as the technological resources (Zahorsky, 2009). Kraft Foods Group has human resources who are highly experienced and skilled adequately. Their technical ability is, therefore, high.

They have the ability to utilize the available technological resources to improve the performance of the organization. Technological resources include software and design, among others. They help the company gather relevant information that is in turn used for production purposes.

Intellectual resources

This refers to knowledge that is held by members of the organization. Kraft Foods Group has people who have sufficient knowledge that can be utilized in production methods. It has a diverse team of employees who have the right skills to move the organization forward (Bramha, 2011).

The company makes use of “patents, copyrights, as well as trademarks” to safeguard its intellectual resources. It is due to its intellectual property that the company has been among the top in the world.

Goodwill

This is an intangible resource and a very important asset for a company. It is the difference between the company’s assets and the actual value of the company as a whole (Bramha, 2011). Goodwill is important since it influences the reputation of an organization.

Kraft Foods Group has a rich goodwill and a good reputation to its customers. For instance, in the year 2010 the company had goodwill worth $63,819. In the year 2012 goodwill was worth $62,482. In the first quarter of the year 2013, goodwill was $11, 319.

Cultural, reputational and strategic alliances

The company has a culture that allows innovation, diversity and economical growth. Its culture is dynamic (SWOT analysis: Lesson, 2009). It has a good reputation owing to its high quality services. It is as a result of its reputation that it has been able to develop a strong goodwill. Customers are loyal to its services and products. The company has a number of strategic alliances in order to be competitive.

This helps it expand its market and operation. For instance, the company announced an alliance with Schawk Inc., an imaging company. This would help Kraft Foods Group to expand its services to imaging and gain more customers for its food products.

Distinctive capabilities

Architecture

This is the ability of a company to come up with strategies that helps it gain a competitive advantage over its rivals (Zahorsky, 2009). A company that has Architecture ability can come with strategies that other companies are yet to develop, making it competitive. Kraft Foods Group has employees who have the ability to architect competitive strategies. Creativity is vital in Architecture.

Reputation

This is simply the image that the company has to its customers. A good reputation is built but not acquired. To build a good reputation, the company has to offer distinguished products and services that have the ability to win the trust and loyalty of employees. Kraft Foods Group is cautious of its customer’s health, a strategy that has been crucial in building its good reputation.

Innovation

Innovation is the ability to improve on the current products and services to make them better and more satisfactory to customers (SWOT analysis: Lesson, 2009). Kraft Foods Group has employees who are highly creative, thus influencing the organization’s innovation.

The company gives its employees the chance to develop their innovative skills. The company also gives employees chances to contribute in decision-making. This facilitates innovation in the company and becomes a competitive advantage.

Conclusion

A company can be rich in terms of resources, but may not have a competitive advantage. Having resources is, therefore, not enough. A company has to come up with ways to use its resources properly to gain a competitive advantage.

It is possible to have an organization that has few resources, but with a better competitive advantage compared to another company that has many resources. The difference is in the utilization of these resources. A company that is rich in resources and uses them well is usually very competitive and successful.

References

Bramha, D. (2011). Internal analysis in strategic management. Web.

Henry, A. (2007). The internal environment: A resource based view of strategy. Understanding Strategic Management. Oxford University Press.

SWOT analysis: Lesson. (2009). Web.

Zahorsky, D. (2009). A business owner’s secret weapon: SWOT analysis. Web.

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